IDEX Corporation 2026 Q3 Earnings Call

Jim, please go ahead. Good morning, everyone, and welcome to IDEX's Third Quarter 2026 Earnings Conference Call.

We released our third quarter financial results earlier this morning, and you can find both our press release and earnings call slide presentation in the investors section of our website, idexcorp.com. On the call with me today are Eric Ashleman, President and Chief Executive Officer of IDEX, and Sean Gillen, our Chief Financial Officer. Today's call will begin with Eric providing highlights of our third quarter results and an update on our business outlook and strategies. Then Sean will discuss additional financial details and our updated outlook for 2026. Following our prepared remarks, we will open the line for questions. Before we begin, please refer to slide 2 of our presentation, where we note that comments today will include forward-looking statements based on current expectations.

Actual results could differ materially from these statements due to a number of risks and uncertainties, which are discussed in our press release and SEC filings. As IDEX provides non-GAAP financial information, we have provided reconciliations between GAAP and non-GAAP measures in our press release and the appendix of our presentation materials, which are available on our website. With that, I will turn the call over to Eric.

Thanks, Jim. Good morning, everyone, and thank you for joining us today. I'm on slide 3. IDEX delivered another strong quarter with Q3 results ahead of our expectations on sales, margins, and earnings. Sales and adjusted EPS were both records. Organic sales grew 8%. Adjusted EBITDA margin expanded 50 basis points year-over-year to 27.8%, and adjusted EPS grew 15% to $2.33. Year to date, organic sales are up 6%, adjusted EBITDA margin is up 50 basis points, and adjusted EPS is up 14%. These results are consistent with our long-term growth expectations and reflect deliberate choices to build integrated growth platforms and tune our capabilities toward advantage markets guided by 8020. In addition to the strong sales and earnings performance, orders were again a highlight in the quarter, growing 13% year-over-year, reaching nearly $1 billion.

We saw organic order growth in all three segments, with continued strong growth in HST and broadening growth across our industrial businesses in FMT. We are raising our full year 2026 outlook due to the strong Q3 results and are expecting to close out the year with momentum. Sean Gillen will get into greater detail on our results and guidance later in the call. Before turning it over to him, I'd like to provide an update on our performance in certain advantage markets. Please turn to slide 4. As discussed on previous calls, data centers, semiconductor, space and defense, and water continue to lead the way for growth at IDEX. While the order and sales numbers inflected noticeably in 2026, this is a story that's been building for a few years, confirming the original strategic thesis powering so much of our post-pandemic capital deployment.

Thoughtful 8020 is shaping both growth and profitability as we apply it along the way. We'll touch a bit more on that in the next slide. In data centers, our teams win by solving increasingly more difficult technical problems as the industry scales. Our primary solutions include thermal management technologies for clean, behind-the-meter power generation, and solutions that improve reliability of liquid cooling systems. We expect demand in this space to remain healthy. In semiconductor, we are seeing strong demand across several applications, including filtration, sealing, optics, and thermal management solutions that sit inside process tools and metrology equipment. Roughly half of our semiconductor business is tied to consumables that provide a more recurring revenue stream. In FMT, we sell high-purity pumps and heaters that support ultrapure water applications in wafer fabrication. In space and defense, our optics help satellites transmit, receive, and filter signals across low Earth orbit.

We are helping set critical specifications in these growing markets, and once established, these specifications can support revenue streams for decades. We are also seeing growth in optical solutions supporting next generation defense applications. Space launch and lift capacity is reaching an inflection point, supporting even more robust growth in the years to come, and Mott is solving problems to help make that possible through bespoke filtration solutions. They are also involved in a number of development projects within defense applications that are moving at speeds not previously seen within those markets. Finally, in our FSDP segment, BAND-IT's engineered clamping products are growing strongly across commercial aerospace, defense, and spacecraft platforms. Our intelligent water platform within our FMT segment continues to grow nicely and profitably up high single digits in the third quarter.

Last month at WEFTEC, North America's largest annual water show, we hosted investors and showcased how we've brought together leading positions in flow monitoring, robotic pipe inspection, AI-enabled software, and rehab tools, all connected through PERISPEK, our cloud-based platform. Our ultimate product here is analytics and information. We help municipalities diagnose their problems before they commit capital to fix them. Please turn to slide 5. I want to spend a moment on an underappreciated driver of our growth within integrated platforms, which we have deployed within the fast-growing advantage markets I covered on the last slide. Our ability to tune our solutions laterally and quickly to faster-growing verticals is a distinct competitive advantage that's unique to IDEX. First, we take advantage of our fundamental component orientation to deliver powerful solutions at relatively low levels of total systems cost.

This has always powered our superior profitability and cash generation and our ability to command price ahead of cost while opening doors to top customer technical talent. Next, we have connected teams carefully within integrated platforms where a tight band of technical capabilities aligns with specific targeted advantage markets. We apply our proprietary 8020 playbook across this matrix to pinpoint areas where resources should be augmented or reduced. Finally, we lean on our entrepreneurial culture, flat organizational structure, and celebration of local decision-making autonomy to fuel agility and speed as we dynamically shift resources and capital to best optimize growth and value across the platform. I would like to take you through three examples of this important competitive advantage so you can best appreciate its impact on current performance. At Mott, our command of porous metal filtration has long served both legacy and transformational energy markets.

Those same basic technical capabilities solve atomic-level purity challenges in semiconductor manufacturing. As this market has experienced significant growth, our teams have swung resources and modest incremental capital quickly to meet customer requirements, all within the same four walls in Connecticut. At Muon, our electroforming expertise, which has long been deployed in critical care respiratory applications, now enables fast, accurate fiber alignment for optical circuit switching in data centers. The component-level technology and process methodology are the foundation, with our best-in-class engineers applying their know-how to tune them to a new application. The team saw the opportunity, made the commitment to an identified 8020 market, dedicated talent and capacity, and aligned incentives to make it happen. Great win for IDEX. Finally, Muon's laser etching of glass and ceramics has been re-engineered to produce precision RF antennas for space applications.

This came about from a customer access point elsewhere within the platform. It simply would not have happened without the cross-business communication that we formalized within our Materials Science Solutions platform. This tunability, which clearly helps us grow faster, also helps us optimize profitability as we do it. Recall that we lifted the Muon business to HST's average segment margin level in Q3 last year. This year, the business has grown 20% organically year to date, driven by strength in our 8020 markets, and margins have advanced further. At Mott, as we have shifted resources towards fast-growing and highly profitable areas within semiconductor and space and defense, we are enjoying growth rates above the segment average in those 8020 markets and have driven meaningful improvement in margin. We still have a few larger culls to execute on some legacy business that will set us up well for 2027 and beyond.

Why does tunability ultimately matter? It allows us to respond quickly to unpredictable shifts in today's most dynamic markets while also supporting margin expansion in a dimension that is additive to basic growth leverage. Please turn to slide 6. Switching gears, I would also like to highlight the overall FMT segment for a moment. Coming into 2026, we plan for a relatively flat revenue year in the segment. Orders and sales have tracked ahead of that plan all year, and organic sales growth stepped up to 4% in the third quarter. This performance goes beyond the dynamics in water that I just discussed. We are seeing a broadening of demand in our industrial businesses and stabilization with indicators of future growth in areas like ag and energy. Lastly, I want to touch on inflation.

It has proven stubborn, and elevated energy prices continue to push input costs higher, but the IDEX model is built to handle this. Our components perform mission-critical functions at a small share of our customer's total system cost, so we can price for the value we deliver. We do that in a measured way as conditions warrant, rather than in large calendar-driven steps. Combined with continuous improvement in the benefits of 8020, that enables us to manage effectively through inflationary environments. Price cost was positive on a dollar basis again this quarter, and our teams expanded margins while absorbing higher costs. With that, I'll turn it over to Sean to walk through the quarter in more detail, including segment performance and our updated outlook.